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My friend and fellow Burner, Amazing Affinity, has recently retired and gosh, am I envious. Despite her “life of leisure,” she is a fervent supporter of the arts and has been a rockstar volunteer for the Black Rock Arts Foundation and the Burning Man Project. She is such an asset to our community that she was recently bestowed the honor of having an award named after her: the Affinity Award. The Burning Man Project vision hopes to lift the human spirit, address social problems and inspire a sense of culture, community and cultural engagement. Affinity is this vision in human form. She never ceases to amaze me! I admire her so much, I asked if she would inspire us with her advice on how to retire early just like her! Here is her well thought-out post.

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My friend Catherine asked me to write a post for Money Monday because my husband and I each retired at 63, and she thought you might like to know how we did it.

When I met my husband I was 45 and about $45,000 in debt including a $5,000 student loan from law school that had blossomed thru the years to about $17,000. The first thing he encouraged me to do was make a debt plan and start making double payments. I was only making $57,000 at the time so we went on a “paying the debt off binge”. It took me about 3 years to get out of debt. And the only debt I have had since is a mortgage; I use credit cards for purchases but pay them off every month .

The second year of our relationship, 1994, an apartment became available in our neighborhood. We lived on Russian Hill so it had never occurred to me that I might be able to buy there. It was a walk up (70 stairs) and a tenants in common building so they required 25% down on the price of $150,000, so we each had to come up with $20,000, and I was in debt still and he did not have any savings. We each borrowed the money from our friends and family for the down payment, and paid them back over time, and sold the apartment in 2006 for $550,000. Let’s be clear that was luck, we bought at the bottom of the market and sold at the top of the market, everyone would love to do that.

But what was not luck was our being satisfied with our one bedroom apartment for 12 years. The first time my best friend came to visit she said, “This is nice, but it is a starter apartment, you will want a larger apartment or house soon.” We replied, “No, we intend to live here as long as we can, and love it, we want to retire early.” “We do not want to overbuy a home, then if the market plunges we will not be in over our heads.” I also suggest you pay the mortgage off if you can. Then you have the option of living in it or selling it to move where you might retire, and use the money to buy elsewhere.

And I think the best thing we did was take full advantage of our 401(k)s. When I was paying off my debt I only made a deferral to the extent of the matching contribution my company was making. But after my debt was paid I maxed out my 401(k) every year. If you can afford to put it into the Roth portion of your 401(k) then do that. If you make a Roth contribution you will not receive a tax deferral for your contribution but all of the gains you earned will come out tax free. There are two kinds of “free money” out there; the matching contribution to your 401(k) plan and the Roth gains that are never taxed. Take the most advantage possible of these features.

I know you already know all of this, but let me tell you what a joy it is to be retired, and traveling and not worrying about work while on vacation. Good luck.

So my early retirement tips are:

1. No debt except your mortgage.
2. Don’t overbuy your home,
3. Pay into your 401(k) as much as possible, especially in your early years, but always at least to the extent of any matching contribution.
4. My final suggestion is that you see any financial windfalls (bonuses, etc.) as ways to get ahead rather than splurge. Take 75% of the windfall and save it, or if it is from your job you may be able to put it in your 401(k) if you had not maxed it out that year. And then take the 25% and splurge.

It has been fun talking about money, feel free to contact me if you have questions: affinitymingle@gmail.com

I also have a plus size fashion blog and I would love for you to stop by and check it out if you have an interest or know someone who might enjoy it. It is more of a D.I.Y., how to make it work and a resource blog than a true fashion blog. http://affatshionista.com/

Dear Vixen,

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Welcome to the Dear Vixen blog, derived from an advice column I wrote while getting my MBA. I'm Catherine Gacad. I live in SF. I give helpful, opinionated advice based on my own experience and from the expertise of my extensive network. Email me with topics and questions or suggestions for guest posts. For more click here.